Land values: Going up

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Farmland values are likely to continue their long-term upward trend in 2011 after a brief pause in 2009 and early 2010, according to two university economists who follow land price trends.

“I would say that land will continue to move upward at 4 to 5% a year,” says Mike Duffy of Iowa State University.

But farmland price increases the next couple of years aren’t likely to go much higher than that, says Gary Schnitkey of the University of Illinois. “There is enough wariness out there that it will cap increases,” he says.

Wariness is tied to a sense that this year’s high crop prices won’t last, plus unease about the general economy, he says.

“If we budget corn and soybean returns based on the current price outlook, 2011 looks like a prosperous year,” Schnitkey says. “But today’s prices are likely to come back to the longer-term trend price in a year or so.”